Japanese Trade

April 22, 2009

Analysts were encouraged by Japan’s March merchandise trade figures.  First derivative comparisons — the rate of change — remained awful.  The surplus fell 99% from Y 1096 billion in March 2008 to Y 11 billion in March 2009 despite a 50.6% decline in mineral fuel imports.  Overall exports plunged 45.6%, including drops of 56.1% to the EU, 51.4% to the United States, and 39.5% to Asia.  Export volumes posted an on-year decline of 42.4% in the first quarter, compared to a 19.8% drop in the year to 4Q08, a 2.4% on-year rise in 3Q08, and gains of 4.8% in 2007 and 7.7% in 2006.  Grounds for encouragement can be found in second derivative comparisons, that is changes in the rate of change.  In seasonally adjusted terms, exports had recorded monthly declines of at least 10% in November, December and January and had tumbled 65.4% at a seasonally adjusted annual rate in the five months between September and February.  However, the monthly drop in February was more than halved to 4.7%, and seasonally adjusted exports actually rose 2.2% last month.  The brightening growth outlook in China, the destination for almost a fifth of Japanese exports, has been an additional source of hope. 

The yen remains a pricey 18.7% stronger against the dollar than its average 116.4 level during 2001-7, but it was much less competitive earlier this year.  At the yen’s peak on January 21, Japan’s currency was 12.5% stronger than now.  This drop represents one major difference between currency trends at the start of the Obama Administration and what happened during the last Democratic Party presidency.  A dollar exchanged for 124.97 yen when Bill Clinton was sworn in on January 20, 1993 but 11.7% weaker on April 22nd and heading for a 1993 low of Y 100.4 touched in August.

Copyright 2009 Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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